Global Economics Essay Example | Topics and Well Written Essays - 500 words - 1

Global Economics - Essay Example In my view, the creation of such institutions is a laudable effort and involved outstanding foresight considering the current landscape of the world economy. However, its sweeping power and influence over a country could prove disastrous in the event of miscalculation or error in analysis. In essence, the idea behind the IMF’s existence is crisis prevention rescuing nations by lending intermediation and surveillance. Policy reform is pertinent in the whole equation where the IMF is concerned and that is why its terms serves as objects of criticisms due to a popular perception of IMF’s manipulation and intrusion in a country’s sovereignty. One of the most controversial impositions of the IMF, for instance, is the austerity measure as condition to a borrowing country. â€Å"The IMF held that excessive government intervention was the fundamental cause of debt crisis. Their plan therefore involved eliminating public enterprises, sharply reducing government subsidies and deficit spending, weakening cost-of-living allowances, and decontrolling prices and exchange rates.† (Pollin, p. 146) This particular measure has been under fire because, although it achieved some success in increasing a country’s ability to service its debt, it sacrifice s the incomes of ordinary people, hence collapsing the mass purchasing power and living standards in a country. The austerity program is widely perceived as one of the failures of the IMF. For one, it has failed in achieving for Argentina some sort of stability amid its debt crisis in the late 1970s. The austerity measure caused the collapse of domestic investment as throughout the crisis years’ large numbers of capitalists spirited their money out of the country in search of safer and higher-yielding havens. (Pollin, p. 146) Not a few experts have decried that the IMF has very little incidence of success.